KU Financial Report
Notes to the Financial Statements
Continued...
3. Significant accounting judgements, estimates and assumptions
The preparation of financial statements requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates
and associated assumptions are based on historical experience and other various factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements. Actual results
may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the
revision and future periods if the revision affects both current and future periods.
Employee entitlements:
Management judgement is applied in determining the following key assumptions used in the calculation of long
service leave at balance date:
• future increases in wages and salaries;
• future on cost rates; and
• experience of employee departures and period of service.
Leasehold Improvements:
KU operates a significant number of long day care and pre-school centres on leased premises. The current policy
of KU is to depreciate the leasehold improvements funded by KU over the expected useful life of the improvement
rather than the remaining lease term as historically these leases are extended and rolled over. Should these leases
not be renewed or renewed on substantially less favourable commercial terms, KU may be required to impair specific
leasehold improvements.
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KU Children’s Services